The challenge of understanding customers

SOAP powder manufacturers are better informed about who they sell their products to than the car and leasing industries are about their customers.

Although there is a broad perception that the fleet industry represents more than half of new cars sales every year, there is no information readily available showing how the world is broken down in terms of size, and where cars go.

Having such information at their fingertips would save the fleet industry wasting resources by allowing them to more effectively bring new products to market that are tailored to customer requirements, John Kiff, director of the International Car Distribution Programme told delegates.

He added: ‘Why don’t we have this information readily available, at least annually? One-off research is not sufficient, it is just a snapshot at that time and things are constantly changing.’

Kiff said the failings for companies not having this information vary, but ultimately they are wasting time and money.

But he added: ‘It’s mainly a waste of resources by not understanding the true potential size of the market. Pushing cars into the wrong market damages residual values.’

However, some commentators believe manufacturers do have access to such information, but are unwilling to share it with their competitors.

Transport policy in Government

TRANSPORT Minister Stephen Ladyman rounded on critics who claimed the Government was anti-car, but added that something had to be done to ease congestion, with fleets at the forefront.

He said: ‘There has been a lot of nonsense written about whether the Government is anti-car or not. How can we be anti-car when it plays such a crucial role in British life, and when it is growing so rapidly during our term of office?

‘Just as we recognise the need for cars, so we recognise the specific needs of fleets – that for many of you there is no alternative.

‘But we have to face up to the fact that congestion is getting worse.’

Ladyman claimed the Government had developed a ‘multi-faceted strategy designed to tackle congestion’, which included investment in public transport, new roads and to try and control traffic better through technology, car sharing lanes and traffic officers.

And he promised that a road pricing scheme would not be a ‘double tax’ on the motorist, claiming that by changing the habits of 4% of drivers would lead to a 40% drop in congestion.

Ladyman also called on manufacturers to produce more interesting environmentally-friendly cars, and that fleets need to be pushing greener cars to their drivers.

He said: ‘The fleet sector has always played a key role in the development of cleaner fuels, cleaner vehicles, and greener transport. That will continue as we look at the potential for biofuels, and further ahead to technology like fuel cells.’

Can you be green and profitable?

IT is possible to be green and profitable if you plan ahead, according to Tony Bosworth, senior transport campaigner for Friends of the Earth.

He urged fleets, and businesses in general, not to be complacent about environmental issues, arguing that it could improve commercial performance.

He said: ‘There are huge challenges, but there are huge opportunities as well, both for society and business.

‘Climate change is already upon us – how bad are we going to let it get? We need to take real action.

‘We are going to have to change how and how much we travel.’

Bosworth called for mandatory standards for fuel efficiency and vehicle emissions from the Government, and urged businesses to consider telephone and video conferencing where possible, instead of travel.

He said the Royal Bank of Scotland saved £70,000 each month by using such facilities.

Bosworth concluded: ‘We need a strong lead from the Government and active involvement from businesses developing technology, products and services to help combat climate change.’

Launch of the charter for fleet suppliers

THE beginnings of a charter for fleet suppliers took shape as the suppliers themselves had a chance to respond to demands from clients.

The list of requirements, gathered from fleet managers at the Fleet News Hit for Six conference in September, showed a damning list of basic problems they encountered.

The list of requests included named customer service contacts to allow a relationship to grow between operators, drivers and suppliers, and notification of changes which were not regularly forthcoming.

Other messages, relayed by Liz Hollands, fleet manager for DTZ Debenham Tie Leung, included ‘Don’t promise what you can’t deliver,’ and ‘Be honest – if there is a problem, tell us’.

A straw poll of delegates revealed no one had any objection to any of the statements on the charter.

Tony Leigh, chairman of the Association of Car Fleet Operators, said leasing companies were stuck in the past and needed to ‘bring themselves into the 21st century.’

Another delegate said too often the industry over-complicated its operations, and should make a concerted effort to keep things simple.

The charter will now be refined, based on the leasing industry’s feedback.

Risks and rewards of outsourcing

GREAT thought and a consideration of both benefits and risk is required before outsourcing operations.

Rene de Sousa, senior procurement specialist for the Chartered Institute of Purchasing and Supply, told delegates to consider the demands of customers and set an agreed level of service before taking the outsourcing plunge.

The process can be complex, he warned, and the price of outsourcing failure can be enormous.

De Sousa highlighted the recent example of General Motors, whose share price fell 10% after incurring US$11 billion costs through a pensions agreement with Delphi.

He said: ‘You have to make sure you know what you want before you engage an external body.

‘The main risk is a lack of attention to contract formulation. You have to be specific, you have to be able to make sure your target is achievable and realistic over a period of time.’

Outsourcing is a complex strategic activity if evaluated and executed correctly, he concluded, and consideration of the pitfalls will lead to happier customers and more profit.

Future of leasing

THE future for the company car is bright, but leasing companies need to move from providing accounting to a full service.

That was the message to delegates from Kevin McNally, managing director of LeasePlan UK, as he presented his vision of things to come.

He said the industry needed to change with the times, but warned that the implications of any changes must be fully evaluated.

‘When talking about the future of anything it’s very important to realise that it’s very easy to get things wrong,’ he told delegates.

McNally expected the company car to move from an expected part of an employment package to an essential one.

As pressures on fleet managers grow, through issues such as the environment and duty of care increase, more of them will look to leasing firms to provide expertise as outsourcing of fleet management grows over the next five years.

And to ensure as much control as possible, many will move towards company cars rather than cash alternatives.

McNally said: ‘If it’s complex, companies don’t like it and want help and support. Sometimes they have to go externally to get it. We must be up to date and expert.’

Profit in the used car market

GROWTH in the used car market will continue to be driven by the popularity of diesel cars, delegates were told.

But although a used diesel car will still fetch a premium over its petrol equivalent in the used car market, this differential is likely to shrink causing a decline in used car values overall, Mark Cowling, operations director for CAP said.

And he stressed that diesel residual values will still hold up better than their petrol equivalents.

Cowling said the used car market is more than three times bigger than the one for new cars, adding: ‘The reason is that while everyone would like to buy a new car, most people don’t have the cash or access to a company car scheme.’

And fleet companies are driving change in the industry with their demand for cars with lower emissions and ultimately lower company car tax.

Leadership and customer service excellence

PASSIONATE and great leadership combined with involvement and communication with employees can help suppliers develop clear service philosophies that they can deliver consistently.

Delegates heard from Graham Clark, director of executive MBA Programme at Cranfield School of Management, who said it was important companies recognise ‘what the customer is buying, not what they are paying for’.

He cited DIY stores as an example saying customers were not just buying tools for a job, they were buying the self-esteem they feel by correctly making a shelf that didn’t slope or fall down.

Delivering exceptional performance

THE message from marketeer Simon Gulliford to delegates at the conference was simple: ‘Good is no longer good enough’.

Gulliford, who until last year was group marketing director for Barclays, highlighted how customers had become demanding and therefore more powerful.

Speaking at the event for the second year running, he used amusing anecdotes to punctuate his message to customer suppliers that ‘being no worse than the other lot is not a competitive position’.

But for any vision to succeed it must have the buy-in and support from staff before it will provide compelling to the customer.

He also stressed that ‘getting behind the obvious’ customer requirements was a vital ingredient for success.

Gulliford said: ‘If anyone comes to you saying that customers want value for money then throw them out of your office. Who wants to be resolutely ripped off?’

Fuel technology – the choice ahead for fleets

Stephen Joseph, executive director, Transport 2000

TACKLING climate change should be at the core of Britain’s transport strategy if the Government is serious about the environment.

Stephen Joseph, executive director of Transport 2000, proposed an alternative to the Government’s transport strategy which he said was needed to tackle growing environmental problems.

He said: ‘Measures such as biofuels will only address part of the problem.’

He called for affirmative Government action in a range of areas to slow down emissions of CO2 and change travel behaviour among both fleets and the public.

Joseph’s strategy involves tax reforms to encourage lower mileage and greener vehicles and road user charging to cut congestion.

Speed limits would be reduced and speed limiter fitted in new cars, while public transport networks would be improved.

Joseph urged fleets to be ready for tax changes and road user charging.

He added: ‘You can change travel behaviour to make a significant difference.’

Five minute blasts of innovation

AS part of a new series of ‘innovation blasts’ at the conference, three areas that will have an impact on the fleet industry were discussed in five-minute presentations.

Using either a green card for yes or a red one for no, the audience members were asked to vote on the subject.

Road tolls

Arthur Beard, customer services manager for M6 toll operator Midland Expressway presented the argument that toll roads can greatly benefit fleets, cutting down on journey times and allowing drivers to avoid congestion.

Question: Will road tolls benefit fleet operators?

Concerns raised: Toll roads are too limited a solution to the UK’s overall congestion problem.

Overall verdict: Yes.

The internet

Emap Automotive business to business online editor Jeremy Bennett used the event to launch www.companycardriver.co.uk, a website aimed at anyone who drives a car for work which features useful information such as road tests, a tax calculator, news, new model updates and a route planner.

Question: Will fleet managers recommend CCD to their drivers?

Concerns raised: Not everyone has access to the internet, it could diminish the relationship between fleet managers and their drivers.

Overall verdict: Yes

Leasing

John Watts, CAPcalc manager at CAP Motor Research, outlined details of the company’s vehicle valuation data analysis product, TrendAnalyser.

Question: Do you think TrendAnalyser is useful?

Concerns raised: There is a huge amount of data already available in the marketplace, historic data is not a precursor to what may happen in the future.

Overall verdict: Yes